U.S. says Toyota to pay $1.2 billion over safety issues

Photo by Bloomberg
Anthony Foxx, U.S. secretary of transportation, center, speaks during a news conference with Eric Holder, U.S. attorney general, right, and Preet Bharara, U.S. attorney for the Southern District of New York, at the Department of Justice in Washington, on Wednesday.

(Reuters) — Toyota Motor Corp. will pay a record $1.2 billion to resolve a criminal investigation into its handling of consumer complaints over safety issues, the U.S. Justice Department said Wednesday.

Toyota admitted it misled American consumers by concealing and making deceptive statements about two safety issues, each of which caused a type of unintended acceleration, the Justice Department said.

It is the largest such penalty levied by the United States on an auto company, officials said.

Prosecutors filed criminal charges against the company but agreed to defer and drop them if the company allows an independent monitor to review its safety practices and if it abides by the terms of the deal.

Toyota is "effectively on probation for three years," U.S. Attorney Preet Bharara, whose office conducted the investigation, said at a press conference announcing the settlement.

"It cared more about savings than safety and more about its own brand and bottom line than the truth," Mr. Bharara said.

Toyota said it would take a $1.2 billion after-tax charge for the settlement in the fiscal year ending March 31.

"Entering this agreement, while difficult, is a major step toward putting this unfortunate chapter behind us," Toyota's North American legal chief Christopher Reynolds said in a statement.

The settlement resolves a four-year investigation by U.S. authorities.

Toyota faces hundreds of lawsuits over acceleration problems that gained public attention after the deaths of a California highway patrolman and his family, which were reportedly caused by the unintended acceleration of his Toyota-made Lexus.

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The faulty acceleration prompted Toyota to recall millions of vehicles, beginning in 2009.

But Toyota's public statements about the recall misled the public, because it knew it didn't recall all the cars susceptible to the problems, caused by faulty floor mats, prosecutors said.

The company also took steps to hide from regulators another type of unintended acceleration caused by pedals getting stuck, officials said.

"Idiots! Someone will go to jail if lies are repeatedly told. I can't support this," one Toyota employee said after a meeting with regulators, according to a statement of facts filed with the settlement.

No individuals were charged as part of the settlement.

Last year, Toyota received approval on a settlement valued at $1.6 billion to resolve claims from Toyota owners that the value of their cars dropped after the problems came to light. It is also negotiating with hundreds of customers who said they had been injured.